WASHINGTON (Legal Newsline) – The Consumer Financial Protection Bureau (CFPB) announced this week that it took action against Navy Federal Credit Union after allegations the organization used false threats about debt collection.
Members of the union include active-duty military, retired service members and their families.
To resolve the allegations, Navy Federal Credit Union will correct its debt collection practices and pay $23 million in redress for alleged victims along with $5.5 million in civil penalties. The civil penalty money will go toward the CFPB’s Civil Penalty Fund.
“Navy Federal Credit Union misled its members about its debt collection practices and froze consumers out from their own accounts,” CFPB Director Richard Cordray said. “Financial institutions have a right to collect money that is due to them, but they must comply with federal laws as they do so.”
The CFPB specifically alleged that the union made false threats of legal action and wage garnishment, false threats to service members that it would contact their superiors, and misrepresentations about credit consequences involved with loans.